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BP Business Economic Loss Claim Appeal 2016-1884:Medical Supplies Are Consumable Goods (Variable) And Not Expenses (Fixed)

The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms.

Claimant, a neurology practice in Zone D, appeals the Program’s reconsidered BEL award of $47,122.36 pre RTP. Its sole basis for appeal is that the Program erred in classifying its “medical supplies” expenses as variable rather than fixed. In support, Claimant attaches an exhibit which tracks medical supplies expenses as a
percentage of monthly revenue for several years. Another computation compares services revenue for the month as a percentage of the same category for the year , as well as supply expenses for the month as a percentage of yearly expenses. Claimant argues that the variance shown in these computations proves that there was no correlation between service revenues and supply expenses, as might be expected if such expenses were to be variable in nature.
At the heart of Claimant’s argument is the very real gray area of categorization found in Exhibit 4D of the Settlement Agreement, where “supplies” are deemed a fixed expense, whereas “consumable goods ” are deemed variable. As pointed out by BP, Claimant had a separate “office supplies” expense category that would account for its fixed supply expenses, in contrast to its varying medical supply expenses.
In a very close decision, this panelist is influenced by at least two factors. First, the record is replete with outreach correspondence between the Program and Claimant’s representatives wherein it was obvious that the Program had a clear understanding of Claimant’s business operations. Secondly, there appears to have been a pattern of recent discretionary review decisions wherein the supervising District Court has affirmed the judgment and broad discretion of the Program accountants in making calls such as the present one. On this record, this panelist cannot undermine the Program’s designation of Claimant’s medical supplies as consumable goods, and therefore deemed a variable expense under Exhibit 4D. As such, BP’s final proposal, which affirms the findings of the Program, must be selected in this baseball appeal.

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